Correlation Between Kool2play and Echo Investment
Can any of the company-specific risk be diversified away by investing in both Kool2play and Echo Investment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kool2play and Echo Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kool2play SA and Echo Investment SA, you can compare the effects of market volatilities on Kool2play and Echo Investment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kool2play with a short position of Echo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kool2play and Echo Investment.
Diversification Opportunities for Kool2play and Echo Investment
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kool2play and Echo is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Kool2play SA and Echo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echo Investment SA and Kool2play is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kool2play SA are associated (or correlated) with Echo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echo Investment SA has no effect on the direction of Kool2play i.e., Kool2play and Echo Investment go up and down completely randomly.
Pair Corralation between Kool2play and Echo Investment
Assuming the 90 days trading horizon Kool2play SA is expected to under-perform the Echo Investment. In addition to that, Kool2play is 4.01 times more volatile than Echo Investment SA. It trades about -0.05 of its total potential returns per unit of risk. Echo Investment SA is currently generating about 0.03 per unit of volatility. If you would invest 391.00 in Echo Investment SA on August 27, 2024 and sell it today you would earn a total of 60.00 from holding Echo Investment SA or generate 15.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.25% |
| Values | Daily Returns |
Kool2play SA vs. Echo Investment SA
Performance |
| Timeline |
| Kool2play SA |
| Echo Investment SA |
Kool2play and Echo Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kool2play and Echo Investment
The main advantage of trading using opposite Kool2play and Echo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kool2play position performs unexpectedly, Echo Investment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Echo Investment will offset losses from the drop in Echo Investment's long position.| Kool2play vs. Clean Carbon Energy | Kool2play vs. ADX | Kool2play vs. Agroliga Group PLC | Kool2play vs. Vee SA |
| Echo Investment vs. Ice Code Games | Echo Investment vs. UF Games SA | Echo Investment vs. Mlk Foods Public | Echo Investment vs. Cloud Technologies SA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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